Apparently, the Securities and Exchange Commission has found its missing whistle. The agency that allowed Wall Street's deceptive practices to go undetected for years called a penalty last week against the firm Goldman Sachs for securities fraud in the first case of its kind since the collapse of the economy in 2007.
The SEC's civil complaint goes to the heart of the dispute over Wall Street's role in creating the crisis that led to the worst economic downturn since the Great Depression. Essentially, it alleges that wrongdoing by insiders played a big part in the meltdown.
That's contrary to the narrative pushed by Wall Street apologists and bankers like Jamie Dimon of JPMorgan Chase, who told a congressional panel in January that a financial crisis ``happens every five to seven years. We shouldn't be surprised.''
Not the way the SEC complaint tells it.
The short version is that Goldman Sachs created investment instruments that it knew were bound to fail and sold them to unknowing investors who eventually lost billions of dollars. Meanwhile, the SEC says, insiders were allowed to place negative bets on those absurdly weak securities by buying insurance against their failure -- without the knowledge of the buyers on the other end. Goldman Sachs was paid to make the deal.
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